Many investors look up to Warren Buffett and his team, Berkshire Hathaway, for investment guidance. Recently, Berkshire’s investments have included stocks relying on artificial intelligence, or AI, to drive growth. Two of the AI-based stocks that Berkshire owns are Snowflake and Ally Financial.
Snowflake is a leader in the data cloud space, providing customers the ability to store their data quickly and securely while also managing updates and access from one centralized source. The company has a Data Science & ML application which supports AI-based workflows and provides rapid access to customers’ data. Additionally, Snowflake’s Snowpark developer framework allows customers to write programs such as Python and SQL to make data transformations. In the fourth quarter of 2023, Snowflake saw a 54% year-on-year increase in revenue, along with a 32% increase in customers. Despite this, Snowflake’s stock has been discounted from its November 2021 all-time high by 55%, creating a compelling opportunity for investors.
For Ally Financial, many may wonder how an auto-loan and personal-finance company could use AI. However, AI has become increasingly essential to its branchless approach, using information from other documents to help customers fill out auto-lending forms and powering virtual assistants who are available to answer customer service questions. Despite a 2% year-on-year revenue drop in Q1 of 2023, along with a much lower net income than the same quarter in 2022, total deposits rose 11%. Its dividend yield also stands at 4.7%, providing an attractive value proposition to investors.
Warren Buffett is well-known for his investment philosophy and experience. By carefully examining his decisions regarding AI-based stocks, such as Snowflake and Ally Financial, investors can gain valuable insight into what these companies can offer. While both companies may come with some risks, they present some interesting opportunities for investors who are looking to benefit from AI’s capabilities.
